Abstract:
We estimate the economic impact of climate change by exploiting variation in local temperature across suppliers of the same client.
We find that suppliers experiencing a 1°C increase in average daily temperature decrease their sales by 2%.
The effect is more pronounced among suppliers in manufacturing and heat-sensitive industries, which is consistent with lower labor productivity and supply when temperatures are higher.
Financially constrained suppliers are more affected due to their lack of financial flexibility to adapt to changes in temperatures.
We also find that episodes of extremely hot and cold weather lead to large drops in sales.
Short bio:
Emilia Garcia-Appendini is a Senior Research Fellow at the Department of Banking and Finance of the University of Zurich.
Prior to her arrival in Zurich, she held positions as Assistant Professor of Finance at Bocconi University and the University of St Gallen.
Emilia’s main research fields are corporate finance and financial intermediation, with special focus on financial distress and trade credit.
Her research has been published in the Journal of Financial Economics, the Journal of Financial and Quantitative Analysis, and the Journal of Money, Credit, and Banking, among others.